Ranjan Varma

Irrational Buying and Smart Selling December 24, 2011

Personal Finance is combination of maths and psychology. Just 1-10 % maths, 90-99% psychology, to my mind.

Economist has an insightful article on how irrational buying offers an opportunity for smart selling and advertising by brands/ companies.

Excerpts:

  • “You would be amazed to find how often we mislead ourselves, regardless of how smart we think we are, when we attempt to explain why we are behaving the way we do,” Dichter observed in 1960, in his book “The Strategy of Desire”.
  • He held that marketplace decisions are driven by emotions and subconscious whims and fears, and often have little to do with the product itself.
  • Trained as a psychoanalyst, Dichter saw human motivation as an “iceberg”, with two-thirds hidden from view, even to the decision-maker. “What people actually spend their money on in most instances are psychological differences, illusory brand images,” he explained.
  • Sigmund Freud argued that people are governed by irrational, unconscious urges over a century ago.

You may also read my Iceberg theory of money management.

What do you think? Are you aware of your own financial behavior?

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Connect with Ranjan Varma

Ranjan Varma has written 471 post on this blog.

Ranjan Varma has over 20 years of work experience in the financial services industry. Ranjan has worked with LIC & LIC Housing Finance in various positions like Branch Manager, Manager Sales, Area Manager, Deputy Regional Manager, etc. Ranjan has experience working in areas like Sales, Marketing, Investments & HR. Ranjan Varma has been interacting on his blog @ http://ranjanvarma.com since 2007, with posts on how to manage money. Ranjan Varma edits a personal finance website and has built products & tools for financial management @ http://rupeemanager.com. Ranjan also delivers training on personal finance. Ranjan has spoken at various seminars/workshops at Corporates and many Educational Institutions. Ranjan believes in Vipassana, a way of self-transformation through self-observation (to see things as they really are). Ranjan also aspires to create new businesses & projects from time to time.

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Irrational Buying and Smart Selling

1 Comment

  1. Azurwebdev

    I think that to much methematics in economy can lead to a lack of confidence, like in the current crisis. Mathematicians are building too complex financial products, to my mind.

    Your article contains interesting point of view.


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Ranjan Varma

Ranjan Varma has over 20 years of work experience in the financial services industry. Ranjan has worked with LIC & LIC Housing Finance in various positions like Branch Manager, Manager Sales, Area Manager, Deputy Regional Manager, etc. Ranjan has experience working in areas like Sales, Marketing, Investments & HR. Ranjan Varma has been interacting on his blog @ http://ranjanvarma.com since 2007, with posts on how to manage money. Ranjan Varma edits a personal finance website and has built products & tools for financial management @ http://rupeemanager.com. Ranjan also delivers training on personal finance. Ranjan has spoken at various seminars/workshops at Corporates and many Educational Institutions. Ranjan believes in Vipassana, a way of self-transformation through self-observation (to see things as they really are). Ranjan also aspires to create new businesses & projects from time to time.

Irrational Buying and Smart Selling December 24, 2011

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